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2017-09-21 17:42:19

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Warrior Met Coal

$23.28

-1.05 (-4.32%)

17:42

09/21/17

09/21

17:42

09/21/17

17:42

Warrior Met Coal receives favorable IRS private letter ruling

Warrior Met Coal reported that the Internal Revenue Service has issued a Private Letter Ruling that favorably impacts the company's analysis of its ability to utilize its net operating loss carryforwards for federal income tax purposes. Prior to the PLR, the company applied an annual limitation on the utilization of NOLs and expected to pay a significantly higher amount of income taxes for 2017. However, the company expects to be subject to the Alternative Minimum Tax. The company expects to make a year-to-date adjustment in its Q3 financial results to reflect the change in application of Section 382 in computing income tax expense. After applying the revised method, the company believes that its effective income tax rate will be approximately 2% for the full year. The company expects that its NOLs will be less than the amounts previously disclosed due to the change in the application of Section 382, as a result of this ruling. The company now expects its federal NOLs to total approximately $1.8B-$2.0B. The company plans to provide an updated estimate of its NOLs by the end of this fiscal year.

As previously reported, Morgan Stanley downgraded Warrior Met Coal to Equal Weight from Overweight and cut its price target to $17 from $27. Analyst Evan Kurtz has increased concerns about met coal following a recent trip to China saying he sees risks from higher international met coal supply, a low probability of reduced Chinese supply, and peak steel demand in China during 2017-18. Morgan Stanley's commodity team expects benchmark pricing to fall to 100/ton from the current $140/ton by 2019 and for a surplus to form after 2017 as China increases domestic supply and steel production rates slow.

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